Washington Company made the following estimates for the current accounting period: Overhead costs: $250,000
Direct labor hours: 50,000
If 7,000 hours of labor are actually used in February,how much overhead cost would be allocated to work in process during the month? Assume overhead to be allocated on the basis of direct labor hours.
A) $7,000
B) $35,714
C) $35,000
D) $20,833

Question

Quizplus · Accepted Answer

Overhead cost per direct labor hour = $250,000 / 50,000 hours = $5/hour

Overhead cost to be allocated for 7,000 direct labor hours = $5/hour x 7,000 hours = $35,000.

Therefore, the correct answer is C) $35,000.

Washington Company Made the Following Estimates for the Current Accounting